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Keeping Your Online Accounts under “Lock and Key”
By Carol L. Girvin, Advisor
It’s a memory many of us can relate too. That moment as a child, walking into your room, to find someone with your diary open, discovering your deepest thoughts and secrets. It’s disturbing to have your security and privacy ripped away in a single moment. In today’s tech-driven world, computers, cellphones, and smart devices have taken the place of pen-to-paper diaries. Like a diary, they hold our deepest and most sensitive information. In the wrong hands, that information could be used in unwanted ways, potentially costing you a great deal of time and money to recover. It is for this reason that we urge you to take certain precautions with your online accounts. Simple actions and habits when using a computer or smart device could help to keep your online “diary” locked away.
Online security experts, such as Norton and McAfee Internet Security, recommend several steps that used together could help protect your online information.
1. If you are no longer using an account, close it.
If you’ve been using online services for several years now, there is a good chance you’ve made more than one online account which you no longer use. Having these unused accounts could leave your information easily exposed to online hackers. In 2016 the account information from over 360 million users on the social media website, MySpace, was put up for sale on an illegal trading website. Many of these accounts had not been accessed for nearly a decade, but the information could still be used to impersonate users. If you are done with the account, delete or disable it.
2. Stay aware of your surroundings, on and offline.
Would you be able to remember an identifying detail about the person who stood behind you in line at the grocery store while you flipped through your phone? Could you recall the last time you checked the privacy settings on your Facebook page? Remaining complacent in regards to your safety and privacy could put your information in jeopardy. When in a public place, remain cautious of where and how you use the internet. For example, guard your screens the way you would your debit card; don’t use public Wi-Fi networks (including hotels), and only visit trusted sites which have a URL starting with “https”. The majority of online criminals prey on people when they have their guard down.
3. Update your passwords.
We’ve mentioned in one of our previous articles the importance of updating passwords every 90 days. Along with continually updating passwords, it’s important that those passwords are unique and different for every account. In the past, it was recommended to use a string of random letters, numbers, and symbols with both upper and lowercase characters. New recommendations suggest instead using random sentences or phrases that you will be able to recall. A strong passphrase is typically a sentence that is at least 12 characters long. Keeping different passwords for every site can also prevent hackers from gaining access to multiple accounts if one is breached.
4. Post with caution.
It has never been easier to impersonate someone than in today’s world of constant online oversharing. Cybercriminals know this. Common security questions such as a pet’s name or a child’s birthday are often available on people’s social media pages. A great deal of private information is shared accidentally in posts or pictures. It has become a common tactic for home invaders to scope out a strike by perusing social media pages to see when families have left for a trip so they can gain easy access. Even a harmless photo could reveal your location because of geotagging. Most smartphones and apps will embed geographic location into photos, so when you share them, people can see when and where they were taken. This could give criminals a clear picture and timeline of your habits, making you an easier target. It could be a good idea to check the privacy settings on your phone and in your social media profiles to make sure automatic geotagging is turned off.
5. Don’t ignore the security update.
It can be an inconvenience when you’re trying to use your phone or computer, and suddenly your operating system gives you a notification that it needs to update. Many of us delay these updates, but this could create a security risk. Software developers face an ongoing war with hackers. No system is perfect; they know this and are constantly running checks on systems to find any holes. These holes can weaken the security of your system and allow hackers to gain access to part or all of your device. In some cases, hackers have been able to gain access to phone and computer cameras remotely to spy on users. Those updates allow developers to release “patches” to close those security holes and keep hackers at bay.
Online security shouldn’t keep you up at night with worry, but remaining complacent could put you at risk. The internet is a great resource and can allow you to connect with friends and family across the globe, but if you wait until someone has already gained access to your accounts, it may already be too late. Being proactive rather than reactive often yields better results. It can take a cyber-criminal a minute to gain access but could take you potentially months or even years to regain lost accounts. As you venture into the online sphere, remember to stay vigilant and aware. It could be your best defense.
Sources:
Investment advisory services offered through Ciccarelli Advisory Services, Inc., a registered investment adviser independent of FSC Securities Corporation. Securities and additional investment advisory services offered through FSC Securities Corporation, member FINRA/SIPC and a registered investment adviser. 9601 Tamiami Trail North, Naples, FL. 239-262-6577.
A “Night at the Zoo” was truly a night to remember!
On a spectacular June evening, Ciccarelli Advisory Services welcomed clients and their families to the Seneca Park Zoo in Rochester. A total of almost 300 guests attended this very special event! Everyone enjoyed a picnic dinner and full access to the zoo – who didn’t love that rhinoceros? The zoo was open to our guests only which let us all have time to greet old friends, meet new friends, and leisurely enjoy a stroll through the park-like setting of the zoo.
Data Breach Response: A Guide for Our Clients
Our firm considers your family’s online safety and security to be of the utmost importance. To assist you in safeguarding your online experience we are providing you with actions recommended by the FTC (Federal Trade Commission) in the event you experience a data breach. Depending on the type of breach, only a portion of the below info may be exposed. It may still be beneficial to follow all listed steps as a precaution.
To Help Secure Your Credit File:
- Enroll in credit reporting from the three major credit bureaus listed below (or obtain a free credit report at annualcreditreport.com).
Equifax.com/personal/credit-report-services
1-800-685-1111
Experian.com/help
888-EXPERIAN (888-397-3742)
TransUnion.com/credit-help
888-909-8872
- Check the report for any charges you do not recognize. Notify the credit bureau if you notice a charge you did not make.
- Consider placing a credit freeze to make it more difficult for someone to open a new account in your name. (Please note this will require some extra steps to verify your identity next time you apply for a service that requires a credit check.) You can place a freeze through each credit bureau.
- It could be beneficial to file taxes as early as possible. This could prevent someone from using your social security number to get a tax refund or a job.
- Notify us immediately of any letters from the IRS. The IRS does not communicate by phone, email, or text. If you receive communications of this type they are not from the IRS.
To Help Secure Online Accounts:
- Login to all online financial accounts and if possible change the password. Even accounts which may not be a direct financial account, but which utilize any payment system which could be linked to a financial account.
- If you use the same password for any other sites, change those as well. Change passwords at least once every 90 days.
- If you are unable to access an account or are shut out, contact the company whose website you are attempting to access.
To Help Secure Your Debit Cards, Credit Cards, and Bank Accounts:
- If your account is breached, contact your bank or credit card company to cancel and request a new one.
- Review transactions regularly and notify the cards fraud department immediately if you notice any unusual charges.
- If you have automatic payments set up on the cards make sure to update the information.
To Help Secure Your Driver’s License Number:
- Contact your nearest motor vehicle branch and report the security breach. The state can flag your license number in case someone else tries to use it, or they may suggest applying for a new one.
To Secure Your Minor Children’s’ Information:
- Request a free credit freeze for your child. This will make it more difficult for someone to use your child’s information to open accounts. You can request a freeze through each credit bureau.
- Generally, children do not have a credit report unless someone is using their information for fraud. You can ask each of the credit bureaus to check their records for any fraudulent activity.
- If a credit bureau has a credit report for your child, they will send you a copy of the report. Use the instructions provided to remove fraudulent accounts.
While we hope this information is never required, having a preparedness plan in the event of a security breach may help to prevent any further issues.
Investment advisory services offered through Ciccarelli Advisory Services, Inc., a registered investment adviser independent of FSC Securities Corporation. Securities and additional investment advisory services offered through FSC Securities Corporation, member FINRA/SIPC and a registered investment adviser. 9601 Tamiami Trail North, Naples, FL. 239-262-6577.
Determining Home Improvement Costs for Taxes
By Kim Ciccarelli Kantor CFP®, CAP®
At times homeownership can seem like driving down a winding road at night–difficult to navigate without some guiding light to lead the way. There are many different books, pamphlets, and articles available covering the subject of home ownership. However, trying to weed through every iota of information on the topic would prove a tremendous undertaking. One topic we have received various questions about pertains to keeping track of home improvements.
“What home improvements should I keep track of?”
“Can they be deducted from my taxes?”
“Is there any future financial benefit beyond possibly increasing the value of my home?”
To shed some “guiding light” on this often essential side of home ownership, we first need to look at the basis of your property.
What is “basis”?
Generally, the basis of an asset is the cost to you. In regards to real estate, it is the amount of your capital investment in property for tax purposes. Your starting basis is what you paid for the home if you purchased it or built it. When you go through the process of purchasing the property, other costs may arise. Some of these costs can be added onto the basis. Settlement and closing costs that you may be able to include in the basis are:
- Abstract fees
- Charges for installing utility services
- Legal and accounting fees
- Survey fees
- Recording fees
- Transfer or stamp taxes
- Owner’s title insurance
- Real estate taxes assumed from seller
If you receive inherited or gifted property and did not technically “purchase” the property, you will still have a basis. The rules for determining it are slightly different. Inherited property can typically be “stepped up” to the fair market value, as appraised, for the property on the date of the decedent’s death. The basis for gifted property typically does not receive a “step up” in value, but retains the cost basis from the original purchaser.
Much like your home, your basis may undergo some “renovations” over time. The starting basis of your home changes to reflect the true cost of your investment. This is your adjusted basis. If you live in a home for years, make improvements and/or additions to the property, the cost of those changes could be added to the basis (if they qualify under the IRS’s guidelines).
When your property is sold you subtract the adjusted basis from the selling price to determine your profit or loss. This also determines your potential tax liability. As of 2019, if you have lived in your residence for at least two of the last five years, you could keep $250,000 in profits tax-free. For married couples filing jointly, that amount is doubled to $500,000. For property owned less than a year, you are typically taxed at your regular tax rate. Some exceptions do exist, such as if you become disabled or have to sell the home because of a job relocation.
Any profits made over the previously stated amounts may be subject to capital gains taxes. Capital gains taxes are taxes on the profits from the sale of a specific type of asset, such as real estate. The tax is only owed after the asset is sold, not while it is owned. An asset could be held for years, continue to appreciate, and potentially incur substantial tax liabilities without proper planning. Since a higher basis typically means less tax liability, it would be beneficial to assess various expenditures made on your property to determine if they may qualify as an IRS approved improvement.
In recent years, property value has been largely in favor of sellers. As we saw with the housing boom in Silicon Valley, a significant brisk increase in real estate value in an area is possible. If you purchased the home over a decade ago, the inflation of real estate prices could very likely put you over a $250,000 profit. The cost of even just one home improvement could potentially increase your basis by a couple figures. Improvements that can be factored into your adjusted basis include:
- Additional bedrooms, bathrooms, a deck, garage, porch or patio
- Landscaping, a driveway, walkway, fence, retaining wall, or a swimming pool
- Storm windows or doors
- A new roof, siding, or satellite dish
- A heating system
- Central air conditioning
- Central humidifier or vacuum
- Air or water filtration system
- Security system or lawn sprinkler system
It is important to note that regular repairs to the property do not count toward the basis. An improvement adds value to the home, prolongs its useful life, or adapts it to new uses. A repair is necessary maintenance to keep the property habitable and in working condition. In general, if you are adding a new item or upgrading an existing item, it is an improvement. For those considering refreshing their kitchen with some new stainless steel appliances, rejoice!
Whether property has been individually purchased, inherited or gifted, it is important to keep track of any costs which could affect the basis. Most longtime home owners know the importance of keeping track of all home supporting documentation. If there is a disaster, casualty or theft loss, you will need the files to replace or obtain reimbursement for the items. Keeping records of home improvements should follow suit. The IRS recommends that you keep tax returns and any supporting paperwork for at least three years post the return. They can also ask for records up to six years after filing if they suspect someone failed to report twenty five percent or more of their gross income. All receipts or invoices pertaining to the cost of home improvements should also be kept until 6 years after the sale of your home.
Home ownership may bring with it a host of questions, but our team is here to help you navigate the road.
Asset Titling: A Cautionary Tale
By Jasen M. Gilbert CFP®
Your estate takes years of careful consideration and monitoring to grow, but a small error in the titling of an asset may create unintentional and unwanted consequences for you and your loved ones. Detailed documentation of your asset succession plan could save your family time and money. I recently had the opportunity to sit down with Andrew J. Krause and Juan Bendeck; Board Certified Florida Wills Trusts & Estates Attorneys and Partners with Hahn Loeser & Parks LLP, to discuss some of the common estate planning and asset titling issues to look out for. I have created a fictional scenario to better illustrate some of the points we discussed.
In this scenario, married couple John and Mary, are reviewing their estate plan. They have several heirs including children and grandchildren and want to make sure they have a plan in place that will allow their assets to pass with minimal complications. What are some of the considerations they should account for when titling their assets?
Do accounts which should be going into a trust have a “Payable on Death” (POD) individual beneficiary designation?
John has set up a revocable trust to ensure that assets are dispersed evenly amongst his children. This could prevent family feuding over who gets what and could also allow the assets to pass with less legal complications. Unfortunately, John listed one of his children as a beneficiary of a POD bank account instead of having it go into the trust. When he passes, those assets will then go directly to the beneficiary of the account and completely bypass the trust. After all the work that went into setting up the trust, John may want to make sure that those assets are set to go to the correct place.
Should the trust be named as the beneficiary of an annuity or an IRA account?
Mary has an annuity and an IRA account which she has designated to go into her revocable trust. While this could be a viable option, in many cases this may be problematic when it comes to stretching an inherited account. Retirement accounts are subject to required minimum distributions (RMDs) based on the life expectancy of the account holder. When the account holder passes, in some cases, it can be recalculated for the beneficiary’s life expectancy and distributed over their lifetime. If the beneficiary is a non-human entity, such as a revocable trust, then this may not be available. When an annuity is part of an estate, the entirety of the account may have to be withdrawn over a period of 5 years instead of remaining in the account and continuing to grow. An option could be to have an individual named as a beneficiary or have it pass into a conduit trust. IRA accounts payable to a revocable trust could also be troublesome unless payable to a conduit or customized accumulation trust. Every beneficiary designation situation is unique and may need to be modified based on changing circumstances.
What considerations need to be made if a beneficiary has diminishing capacity?
John and Mary have their children listed as equal beneficiaries of their estate. Their daughter has a condition which will lead to her eventual mental incapacitation. Programs such as Medicaid and Supplemental Security Income (SSI) may be a resource for her in the future. These programs disqualify individuals who have over a certain amount in income and assets. In this case, John and Mary may want to consider establishing a “special needs trust” for their daughter. There could be less chance of her being denied benefits, and a trustee can then be appointed for their estate.
How should we plan for probate?
John moved assets into their revocable trust when it was first created, but has since acquired new assets which have not been updated to go into the trust. If John were to pass, these assets may be subject to probate court proceedings if they were not titled in their trust. While trusts are often set up to avoid any problems with probate, in some cases, probate may be advantageous. During probate, creditors are notified and given a set period of time to make any claims of repayment. If they fail to do so in that time frame, they cannot do so later, and the assets may be safe to pass to beneficiaries. How easily the probate process proceeds can depend on your geographic location.
Plan Ahead to Avoid Problems Down The Road.
Overall, one of the most important steps that John and Mary could take to ensure that their asset titling matches their estate plan is to review it consistently. Over time, life circumstances tend to change and it could prevent problems down the road if they are addressed early on. While many accounts are opened with an intent to update beneficiaries in the future, a sudden life-altering event could leave your heirs without any access to those assets. Meeting with an advisor and an estate attorney to review how your assets are being designated could prevent future obstacles for you and your family.
Investment advisory services offered through Ciccarelli Advisory Services, Inc., a registered investment adviser independent of FSC Securities Corporation. Securities and additional investment advisory services offered through FSC Securities Corporation, member FINRA/SIPC and a registered investment adviser. 9601 Tamiami Trail North, Naples, FL. 239-262-6577.
Spring Forward To Get a Fresh Start
By Lynn Ferraina
Each year while changing our clocks to Daylight Savings time, it reminds us of “spring cleaning”. In our homes, this could mean dusting ceiling fans and light fixtures, cleaning window sills and window tracts, vacuuming curtains and window blinds, testing batteries in your smoke detectors, cleaning the oven, arranging and purging pantries and closets. In other words, spring cleaning could keep us busy well into summer.
In the financial world “spring cleaning” could mean reviewing your financial house and getting it in order.
Here are some financial house items to consider reviewing:
- When is the last time you reviewed your health care surrogate, power of attorney and/or your will and revocable living trust? Are the people you choose to help you in the documents still a good choice? What has changed in your life since you created the documents? Did you move, do you have a new grandchild, has someone passed away who is named in the documents?
- Insurance – When is the last time you reviewed your life insurance beneficiaries? Do they still reflect your wishes? Do they coincide with your will and/or trust? Did you name a contingent beneficiary if the primary beneficiary should pass away before you? If you named a minor, is there a trustee named to control the assets until the minor is at an age that they would be responsible enough to manage their own affairs. Other insurances – homeowners, health, long- term care, disability, car insurance…When is the last time you checked to make sure you are adequately covered? Many things can change in a year or two time frame that requires an update of insurance. We certainly learned that when Hurricane Irma came through Naples in 2017.
- Asset Allocation – Diversification may provide a safety net in times of market turmoil. Working with your financial advisor to develop a mix of investments such as U.S. stocks, foreign stocks, bonds, and real estate. Whether your diversification is through individual holdings, mutual funds or managed accounts, your advisor can help you create a portfolio that is aligned with your financial goals.
Lastly, your financial spring cleaning should include “communication” with your family, attorney, CPA, and financial advisor. It’s time to touch base to make sure your wishes and concerns are clearly communicated. Make a location list of your financial assets and where they are held, a list of your online accounts (user names and passwords), your insurances, legal documents, deeds, credit cards, the bills that need to paid monthly, quarterly and annually, professional contacts including your doctors, where your safe deposit box is etc. Everything your successor would need to access if you couldn’t. With communication being the key to any plan, your successor will be grateful that you took the time to express your wishes and help them help you when the time comes.
Investment advisory services offered through Ciccarelli Advisory Services, Inc., a registered investment adviser independent of FSC Securities Corporation. Securities and additional investment advisory services offered through FSC Securities Corporation, member FINRA/SIPC and a registered investment adviser. 9601 Tamiami Trail North, Naples, FL. 239-262-6577.
Filling the Gap: Obstacles Women May Face With Retirement Savings
By Judy Alexander-Wasley MBA, CFP®
March is Women’s History Month–a time to commemorate and honor the contributions women have made to history and society. Women play an integral role in nearly every economic sector: healthcare, business, education, and consumer spending. Despite their growth in the workforce and beyond–there is still a large gap in women’s retirement savings. Recent research from the Transamerica Center for Retirement Studies found that 46% of women are “not too confident” or “not confident at all” about saving for retirement. Most of us know the benefits that come from a comprehensive retirement savings plan; however, women may be confronted by some unique challenges.
1. Longevity
Living a long and happy life is a dream of many. Advancements in medicine and preventative healthcare have allowed each generation to typically live longer than the last. This means that today individuals could be looking at life-spans that extend well into their 100’s. While it’s intriguing to imagine such longevity, it will require a decent nest egg to sustain oneself. This process becomes even more vital for women who live on average 2.3 years longer than a man the same age.
One way to plan for longevity is to take a careful look at your lifestyle and determine how much money will be needed to sustain it over a period of 20-30 years. Some individuals may not be willing to adjust their standard of living in retirement so it’s important to understand the projected costs and how to save for them. Savings strategies might need to be adjusted annually to ensure you meet your financial goals and desires.
2. Healthcare Costs
As our population ages we may need to consider the additional health costs related to living longer. A longer life does not necessarily guarantee better health. There are statistics showing individuals living for years with severe health conditions. Often, one major medical event can cost tens of thousands of dollars. A recent report found that woman may need to save approximately 20% more, on average, to cover medical expenses incurred in their later years. Medicare typically does not cover all required expenses. It can be difficult to predict future expenses as they relate to increases in medical treatment and care, especially long term care facilities and specialized medications.
Early steps to reduce your risk of health issues can often be beneficial. Regular health check-ups along with a doctor-advised diet and exercise plan might alleviate various preventable conditions. It can be advantageous to contribute to a tax-advantaged Healthcare Spending Account (HSA), which permits tax-free withdrawals to cover certain medical expenses in retirement. Your advisor will be able to provide further clarification on HSA eligibility and guidelines.
3. Career Interruptions
Women now comprise nearly half of the U.S. labor force. Many women are also staying in the workforce longer. Despite these trends, women tend to have more career interruptions. A TIAA retirement study discovered out of the individuals surveyed, men averaged 38 years in the workforce and women averaged only 29. They referenced leaving the workforce for various reasons including caring for children, aging parents, or partners. Balancing primary caregiver duties with a full-time career can be difficult and may require reducing hours, reducing pay, or taking a leave of absence. In these instances, making life adjustments to care for children or loved ones may allow for a reduction in certain costs in their care; however, they may have a long-range impact on your savings.
Becoming a parent or primary caregiver often requires a great deal of selflessness, and at times, it may seem appropriate to put your life on hold to help others. Throughout these periods of your life, it is important to ensure that saving for retirement remains in the picture. During career breaks, if you are married, your spouse can continue to make contributions to a Traditional IRA or Roth account on your behalf. It could help to discuss with your advisor the impact a career interruption may have on your current and long-term financial plans. Adjustments may be needed to accommodate your changing circumstances.
Women may be presented with certain challenges pertaining to retirement. On the brighter side, a potentially longer lifespan or time away spent with loved ones should not be feared but celebrated. Developing savings strategies with the guidance of your advisor could help you experience your long-awaited retirement dreams.
Investment advisory services offered through Ciccarelli Advisory Services, Inc., a registered investment adviser independent of FSC Securities Corporation. Additional securities and investment advisory services offered through FSC Securities Corporation, Member FINRA/SIPC and a registered investment adviser. 9601 Tamiami Trail N, Naples, FL 34108. 239-262-6577.
Sources
https://www.aarp.org/retirement/retirement-savings/info-2018/men-women-retirement-spending-fd.html
https://www.thebalance.com/how-to-plan-for-health-care-costs-in-retirement-2388478
https://www.tiaa.org/public/pdf/gendergap-whitepaper-b2c.pdf
Learn How to Avoid Costly Healthcare Blunders at Public Panel-RSVP HERE!
Tuesday, March 19, 2019
3:00- 5:00 P.M.
Silverspot Cinemas
RSVP Below—>
Join Marve Ann M. Alaimo, J.D., Jill Ciccarelli Rapps, CFP® and Susan O. Cassidy, M.D., J.D., for a panel discussion that will help you navigate the complexities of health care decisions and avoid common planning pitfalls.
You will leave with important questions to answer about your health care planning above and beyond your health care estate planning documents. You will also learn techniques to communicate with your family/VIP’s to assist with the implementation of your healthcare plans.
This event is FREE and open to the public. The event includes a 1-hour presentation and cocktail reception with light hors d’oeuvres, following the panel.
Seating is limited! Please RSVP by March 8th.
Investment advisory services offered through Ciccarelli Advisory Services, Inc., a registered investment adviser independent of FSC Securities Corporation. Securities and additional investment advisory services offered through FSC Securities Corporation, member FINRA/SIPC and a registered investment adviser. 9601 Tamiami Trail North, Naples, FL. 239-262-6577.
Love & Finances: Questions to Ask in a Relationship
By Anthony J. Curatolo
Tomorrow night many couples will be celebrating Valentine’s Day with candlelit dinners and declarations of love, while thoughts of financial expectations and responsibilities will most likely take a back seat. Though it may seem like love and finances have no place even standing in the same room together, most relationship experts would agree that honest communication and transparency about your spending and saving habits are essential to a healthy relationship. Staying open and honest about your financial goals and desires can help build trust and intimacy while preventing future problems.
As you and your partner build a life and future together, you should also be discussing the important financial aspects and responsibilities you will face. Some questions you should consider may include:
As a married couple, how should we file our taxes?
The most common knee jerk reaction to this question is “jointly, of course!” Filing jointly could provide the greatest advantages. The IRS gives joint filers one of the largest standard deductions and partners that file together can usually qualify for multiple tax credits. Credits such as:
• The child and dependent care tax credit
• The adoption credit
• Tax-free exclusion of Social Security benefits
• The credit for the elderly and disabled
In 2018, taxpayers who were married but filed separately, on average, will receive a standard deduction of $12,000. Comparatively, those who are married and file jointly will receive an average $24,000 deduction.
In some cases though, couples may want to consider filing separately. If one spouse has very high out of pocket medical expenses to claim, the IRS allows them to deduct the amount of these costs that exceed 7.5% of their adjusted gross income. If one spouse has high medical costs and a lower income, the deduction may be higher when applied to their sole income.
Many tax experts would agree that when debating which filing status to choose, have them prepared both ways and see which one provides the highest deduction.
Should we sign a prenuptial agreement?
In the past, there has been a stigma around prenuptial agreements, and many couples have forgone them with the mindset that signing one signifies a doomed relationship. While it is understandable to be hesitant, this couldn’t be farther from the truth. A prenuptial agreement allows you both to fully disclose your assets, income, and any debt and allows couples a chance to face their finances together to start planning for the future.
With this in mind, a prenuptial agreement may not be right for every couple. Most prenuptial agreements can take a few weeks to negotiate and finalize, and there are some legal fees that are required, but discussing it can bring forward any concerns you may have regarding finances and alleviate these worries. It may be a difficult conversation to have, but once the information is out in the open, you can decide together how it should be handled.
How will we budget/invest/maintain our finances?
For many couples, an avoidance of the topic of money can seem like the right move to preserve relationship harmony. Ask any marriage counselor what is the most common cause of problems in a relationship and they will tell you: lack of communication. In the short term, avoiding the topic of money may keep the peace. If you wait until the day before you tie-the-knot to discuss your financial situation, you may end up spending your honeymoon in separate rooms.
Figuring out a financial plan together is one of the most important decisions you make as a couple and can ensure that you both have a plan for the future that you work toward, together. A great place to start is setting up a budget. Add up both of your after-tax incomes and expenses and compare the totals. You should generally be spending less than you make. Once you know these numbers you can break them down into categories such as wants, needs, and savings. You can make a list of long and short term financial goals you both have, a timeline for these goals, and then adjust your budget accordingly.
It can be a good idea to sit down with an advisor to discuss your financial habits and goals so you can build a comprehensive financial roadmap together. While these conversations may be awkward and uncomfortable to discuss, an advisor can assist in opening up the dialogue with you and partner, so that together you can build a sustainable plan that is in line with your vision for the future.
As we spend the day celebrating love, our team would like to extend our appreciation for allowing us to serve you and your loved ones. Happy Valentine’s Day!
Investment advisory services offered through Ciccarelli Advisory Services, Inc., a registered investment adviser independent of FSC Securities Corporation. Securities and additional investment advisory services offered through FSC Securities Corporation, member FINRA/SIPC and a registered investment adviser. 9601 Tamiami Trail North, Naples, FL. 239-262-6577.
Sources:
Tax Information
https://www.irs.gov/taxtopics/tc607
https://www.irs.gov/pub/irs-pdf/p501.pdf
https://www.irs.gov/pub/irs-pdf/p501.pdf
https://www.rightathome.net/blog/2018-tax-deductions-exemptions-and-credits-for-seniors
Alimony
Money Management Mistakes to Avoid
By Kim Ciccarelli Kantor, CFP®, CAP®
While some people do an exceptional job of instilling sound financial education within their families, the level of formal education offered on this topic is quite lacking. And, if you wait too long to learn valuable money principles, lessons are especially hard to come by in our adult lives. All too often, we learn the hard way. Scores of inexperienced investors have fallen prey to “quick fixes” that prove disastrous.
Any of us can learn and benefit from another’s experience – regardless of your age or financial circumstance. When considering the intentional process of building wealth over time, the words of my father come to mind: “Focus on what you can control: helping to avoid mistakes.”
His guiding philosophy – one which continues to shape our firm to this day – was that wealth could be achieved by doing the right thing consistently, steadily and patiently. Learning proactively from the mistakes of others (helping to avoid the most common mistakes) can be highly beneficial to your financial health and well-being. A few examples include:
Run your finances like a business: Whether you are investing assets of $500,000 or $5 million+, you have a great deal at stake.
As the CFO of your “financial company”, you must ensure that your assets are invested in a systematic, disciplined way that reflects your desired outcome. To accomplish this, you must have (1) a business plan that encompasses short-term and long-term goals; (2) quantifiable benchmarks by which to measure results; (3) a well-defined strategy for attaining your benchmarks and goals; and (4) an experienced, knowledgeable team of professionals to facilitate and execute your plan.
Define your investment policy: All too often, investors are susceptible to the vogue or conventional wisdom of the day. In reality, blanket statements like “This isn’t the right time to buy stocks,” or “Bonds are safe,” or “Cryptocurrency is hot,” do not constitute an effective investment policy. A smart investment policy is a strategic long-term framework that begins with your asset allocation. Consider your time horizon, income requirements, tolerance for risk and volatility, and return expectations.
When a significant change to assets occurs, such as a large withdrawal or contribution, the asset allocation should be revisited. Otherwise a minimum of every 1-2 years might be appropriate.
Give the market time: Despite all of the evidence to the contrary, our human nature drives us to believe that we will be able to successfully time the market – that is, realize all of the gains and get out in time to avoid all the losses. Regardless of this temptation, the consensus is clear: it is time in the market – not timing the market – that correlates to the greatest gains. Even the most experienced investor would find it nearly impossible to time the market correctly on a consistent basis. This is particularly true with stocks, where most of the gains are made in short, climatic spurts.
Consistency is the one key to success; however, the road to success is filled with peaks and valleys. While some especially gifted people like Warren Buffet or John Templeton have achieved admirable success in the realm of investing, we have seen numerous examples over the years where their investment approaches did not perform as strongly as anticipated. The common thread to their success was to create a distinct, well-articulated philosophy about how money is made in the market and to stick with it.
When you emphasize the process of advancing steadily and purposefully towards your money and life goals, you will likely find it easier to overcome the emotion and disappointment that could arise from searching for a “magic bullet” solution.
Limit your emotions in investing: Investing is all too often a manifestation of one of two emotions: fear and greed. While financial management should not be completely devoid of emotion, irrational fear and excessive greed can be damaging to your long-term prospects. Fear often creates the foundation for a classic money management mistake; directing your manager to sell all your stocks after the market plunges. On the flip side, you could lose your shirt going all-in on an overperforming stock or security during a bull market and not having a planned approach for selling.
Having a well-thought-out investment direction, one you genuinely believe in and are committed to, should be the conduit to making good decisions.
Plan for a lifetime: Most people underestimate the income they will need during each stage of life, with the greatest deficit occurring during retirement. It may be tempting to believe that you will remain in good health indefinitely, or that increasing your savings level is not necessary. However, not accumulating enough capital can leave you in a position where you could outlive your money – infringing on your financial security when you need it most.
Your CAS advisor can help you estimate your income needs throughout retirement, and determine a sustainable level of spending and savings based on your unique short and long term goals. With this in mind, develop an asset allocation policy that coincides with your lifestyle planning throughout your life time.
Investment advisory services offered through Ciccarelli Advisory Services, Inc., a registered investment adviser independent of FSC Securities Corporation. Additional securities and investment advisory services offered through FSC Securities Corporation, Member FINRA/SIPC and a registered investment adviser. 9601 Tamiami Trail N, Naples, FL 34108. 239-262-6577.
